Introduction of a simplified tax regime (
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FY 2020-21 and later years)
The Government of India has introduced Section 115BAC in the Income Tax Act (with effect from tax year 2020-21), which allows you to opt for lower tax rates at which your salary can be taxed. The lower tax rates are specified under what is referred to as the “Simplified Tax Regime”. The below table presents the tax rates for your information.
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You can choose either the “Simplified Regime” or the “Old Regime” for FY 2020-21 and the later years. If you opt for lower tax rates (Simplified Regime) you will have to forego pretty much all the exemptions/losses/deductions available otherwise. For example, under the Simplified Regime, no benefits are available under Section 80C (Life insurance, etc.), Section 80D (Mediclaim), Section 80E (Interest on education loan), House Rent Allowance, Leave Travel Allowance, other allowances, Standard Deduction, losses on house property on account of home loan interest, etc. This means that you would lose almost all the tax benefits which are available by way of exemptions/deductions if you opt for lower tax rates (Simplified Regime).
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